FLETCHER: B.C. sinking in red ink, awaits carbon tax wave

Tom Fletcher grew up in the Peace River region and has covered B.C. politics and business as a journalist since 1984.Alberta, Saskatchewan and Manitoba have at least one advantage as Donald Trump’s tariff surge washes ashore. Their governments didn’t get hooked on carbon tax revenues like B.C.’s did.It was a rough day sailing for B.C.’s rookie finance minister, launching her first budget Tuesday as U.S. tariffs took effect at 10% for energy exports and 25% for everything else. Brenda Bailey has been in the role only three months, inheriting a record annual deficit that will crest above $10 billion when the fiscal year ends March 31. Even that is an understatement, as Bailey confirmed when I asked her in the budget lockup about one of the few certainties she faces for 2025, the end of the consumer carbon tax. Paying out smaller rebates for low-income earners than the federal carbon tax formula, the province is keeping close to two thirds of the revenue. The B.C. budget documents indicate that the province is taking in $1.65 billion in net revenue this fiscal year from a tax that currently raises the price of a litre of gasoline by more than 17 cents.Is the end of the carbon tax windfall included in the latest three-year budget? No, Bailey replied, not until the House of Commons passes a bill that removes the federal requirement to keep it at an ever-rising minimum level. In fact the B.C. budget anticipates the next carbon tax increase that is highly unlikely to take effect on April 1.Bailey acknowledged that the carbon tax is on its way out. Federal Liberal leadership hopefuls Mark Carney and Chrystia Freeland have both vowed to drop it soon after one of them replaces Justin Trudeau in a party vote set to conclude March 9. Of course axing the tax is job one for Conservative front-runner Pierre Poilievre. And a desperate B.C. Premier David Eby, watching his majority leak away last October, promised B.C.’s carbon tax would disappear as soon as the federal backstop does.Bailey’s big deficit comes even after her first grim chore, ditching Eby’s promised $1,000-per-family “grocery rebate” that arguably held off the surging B.C. Conservatives last fall. Her budget was out of date before it even emerged from the printers, including such faint hopes as an increase in forest revenues as the U.S. Commerce Department prepares to nearly triple its border duties on softwood lumber by this summer. Tariffs would land on top of that.The end of the B.C. government’s carbon tax windfall means more of its cherished policies are about to be washed overboard. The NDP government imposed a requirement on itself to produce an annual Climate Change Accountability Report, detailing what it’s doing with all that carbon tax treasure.The latest one reaches only 2023. It details subsidy programs for electric vehicle charging stations, e-bikes, bus passes for low-income seniors, energy-saving home retrofits, heat pumps, compost collection, ocean debris removal, plastic recycling and millions for local government climate action plans.There are other signs that B.C.’s climate change voyage is losing the wind from its sails. The budget notes that a sales tax exemption for used zero-emission vehicles is coming to an end, two years early. The province is still saddled with the most aggressive electric vehicle mandate in the western world, requiring 90% of new car sales to be zero-emission by 2030. That’s the 2030 model year, so car dealers have four years to meet a sales target that seems more unlikely with each passing day.The main feature of B.C.’s worst budget ever is a big fat contingency fund, $4 billion in borrowed money to be used to ease the still-unknown effect of U.S. tariffs in still-unknown ways. Bailey admitted that the province will likely also need more federal deficit spending to provide supports to people pushed out of work and businesses battered by a trade war with our biggest customer.Eby made an unprecedented appearance at the start of the budget lockup to brief assembled reporters on retaliation measures as the U.S. tariffs took effect. He doubled down on an earlier promise to pull American liquor from B.C. government stores, but only from “red states” as defined by the results of the latest U.S. election.Kentucky bourbon is one of the main targets of this action, a result that likely doesn’t sit well with the Democrat governor of Kentucky. Eby says he’s sending a message with this measure, but it’s a mixed one at best. California is one of the B.C. wine industry’s biggest competitors, but that’s the bluest of blue states so it won’t be harmed. Other provinces are simply removing all U.S. alcohol, to send a clearer message.Tom Fletcher grew up in the Peace River region and has covered B.C. politics and business as a journalist since 1984. tomfletcherbc@gmail.com X:@tomfletcherbc

FLETCHER: B.C. sinking in red ink, awaits carbon tax wave

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